The Fundamental Formula
How long your money lasts is determined by a simple (but deceptive) relationship:
Years until depletion = f(portfolio size, withdrawal rate, return, inflation, sequence)
The problem is that "return" and "sequence" are unknowable in advance. That's why Monte Carlo simulation — running thousands of market scenarios — is the only honest way to model longevity.
How Long Does $X Last? (Historical Projections)
Portfolio Longevity by Withdrawal Rate — Historical Analysis
| Portfolio | Annual Spend | Rate | Historical Success (30yr) | Historical Success (40yr) |
|---|---|---|---|---|
| $500,000 | $20,000 | 4.0% | ~96% | ~88% |
| $1,000,000 | $40,000 | 4.0% | ~96% | ~88% |
| $1,000,000 | $35,000 | 3.5% | ~99% | ~96% |
| $1,500,000 | $60,000 | 4.0% | ~96% | ~88% |
| $2,000,000 | $60,000 | 3.0% | ~99%+ | ~99% |
| $1,000,000 | $50,000 | 5.0% | ~80% | ~68% |
Source: Bengen (1994), Pfau (2021), Morningstar (2024). Historical success = % of 30-year (or 40-year) periods since 1926 where portfolio did not deplete. 60/40 portfolio assumed.
The 5 Variables That Determine How Long Your Money Lasts
1. Withdrawal Rate — The Most Important Variable
Your withdrawal rate is the annual amount you take from your portfolio divided by its value. At 4%, $1M generates $40,000/year. But the rate compounds: at 5%, your money runs out 8–12 years sooner in typical scenarios. At 3.5%, it lasts nearly indefinitely in most historical periods.
Rule of thumb: Every 0.5% drop in withdrawal rate adds 7–10 years of portfolio longevity in median scenarios. Calculate your withdrawal rate and retirement age →
2. Asset Allocation — Stocks vs. Bonds
Counterintuitively, a 100% stock portfolio doesn't outlast a 60/40 portfolio in most retirement scenarios — despite higher average returns. Why? Sequence of returns risk: a bad market early wipes out too much principal when you're withdrawing. Research consistently shows 50–75% stocks is the optimal range for long retirements.
3. Inflation — The Silent Destroyer
At 3% inflation, a $60,000 lifestyle costs $97,000 in 15 years. Your portfolio must keep growing faster than your inflating withdrawals. Healthcare inflation (historically 5–7%/year) is particularly brutal for retirees under 65 without Medicare.
4. Sequence of Returns — The Uncontrollable Variable
Two retirees with identical portfolios and identical average returns can have completely different outcomes depending on when the bad years hit. A 30% crash in year 2 of retirement is catastrophic. The same crash in year 20 is survivable. This is sequence of returns risk — and it's why Monte Carlo simulation matters.
5. Social Security Timing
Delaying Social Security from 62 to 70 increases your monthly benefit by 77%. More importantly, it dramatically extends portfolio longevity: every year you delay means one more year your portfolio isn't being drawn down for living expenses. For healthy retirees, delaying SS to 70 is one of the highest-ROI decisions in retirement planning. See how SS timing affects your personal retirement date →
Social Security Timing: Impact on Portfolio Longevity
| SS Claim Age | Monthly Benefit (est.) | Portfolio Drawdown Reduced By | Longevity Impact |
|---|---|---|---|
| 62 | ~$1,680/mo | Baseline | Baseline |
| 67 (FRA) | ~$2,400/mo | $720/mo less from portfolio | +5–8 years in bad scenarios |
| 70 | ~$2,976/mo | $1,296/mo less from portfolio | +8–15 years in bad scenarios |
Estimates based on $2,400/mo FRA benefit. Actual benefits vary. Use the SS chart in the Should I Quit Now calculator for your personal numbers.
The Longevity Problem: Living to 95
A 65-year-old woman today has a 50% chance of living to 87 and a 25% chance of living to 94. A couple aged 65 has a 50% chance that at least one partner lives to 92. Your retirement plan needs to survive a 30-year drawdown as the base case, not the edge case.
Enter your portfolio, spending, and expected return. The calculator shows your portfolio longevity under optimistic, base, and pessimistic market scenarios.
Run My Longevity Analysis →Frequently Asked Questions
At a 4% withdrawal rate ($40,000/year), $1 million has historically lasted 30+ years in about 96% of rolling historical periods. At 5% ($50,000/year), the success rate drops to ~80% over 30 years. For a 40-year retirement (retiring at 55 or younger), use 3.5% or lower to maintain high confidence. The exact answer depends on your return assumption, inflation, and Social Security income.
$500,000 at 4% generates $20,000/year — $1,667/month. Combined with $2,000+/month in Social Security at full retirement age, this becomes $3,667/month — workable for many retirees in lower cost-of-living areas. Without Social Security or other income, $500,000 is tight and requires careful budgeting. At 3% withdrawal ($15,000/year), it lasts nearly indefinitely in most historical scenarios.
Retiring at 60 means your portfolio needs to last 30–40 years. Historical data shows a 3.5–3.7% withdrawal rate has worked in ~96% of 40-year periods since 1926. The bigger risks are healthcare costs (5 years before Medicare), sequence of returns in years 1–5, and inflation over a long horizon. With $1.5M+ and 3.5% withdrawal, running out of money by 90 is historically rare but not impossible in the worst-case scenarios.
Morningstar's 2024 research suggests 3.7% for new retirees in 2025 using a 30-year planning horizon. For 40-year horizons (retiring at 50–55), most researchers recommend 3.3–3.5%. The classic 4% rule remains useful as a starting estimate but was calibrated for 30-year retirements starting in 1994 when bond yields were higher. Today's lower yields modestly reduce the safe rate.
Sequence of returns risk is the danger that bad markets early in retirement permanently damage your portfolio. Protection strategies: (1) Keep 1–2 years of expenses in cash so you don't sell stocks in a crash. (2) Use a "bond tent" — higher bond allocation in years 1–5, then shift back to stocks. (3) Dynamic withdrawals: spend less when markets are down. (4) Delay Social Security to 70 — it acts as a longevity insurance policy that reduces portfolio dependence in later years.